The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

It’s the 15th time Congress has been tasked with renewing the motley and growing collection of temporary tax breaks known as the "extenders," and today the new Senate Finance Committee chair, Sen. Ron Wyden (D-Ore.), vowed it will be the last time.

“This will be the last tax extenders bill the committee takes up as long as I’m chairman,” Sen. Wyden said as he opened a committee mark-up today. “That’s why the bill is called the EXPIRE Act. It is meant to expire.”

Is your favorite expired tax break going to be renewed for 2014 and 2015 or dropped forever? That’s essentially what the finance committee was hashing out. The 60-odd provisions of the tax code are written in as temporary provisions but keep getting renewed as Congress delays meaningful tax reform. If your favorite break doesn’t make it for 2014, its chances of being revived later are slim.

“The committee’s mark is the first—and most important—veil to drop in the dance of tax extenders and getting it signed into law,” says Dean Zerbe, national managing director of AlliantGroup in Washington, D.C. and a Forbes contributor.

Wyden jumped right in as the Committee’s new leader—it was his 19th day on the job--not letting the task get derailed by non-germane topics like Sen. John Thune’s (R-S.D.) Amendment #8 to repeal the federal estate tax or Sen. Pat Toomey’s (R-PA) proposed amendment #9 to protect bald eagles from wind turbines.

What’s at stake? On the business side, there are big ticket items like the research and development tax credit, Section 179 expensing and bonus depreciation. On the individual side, it’s a hodge-podge of laws including the deduction for state and local taxes, a provision to exclude the forgiveness of mortgage indebtedness from tax, the IRA charitable rollover that lets seniors take tax-free IRA distributions to give to charity, the $4,000 tuition deduction, and an enhanced break of up to $250 a month for transit commuters (and clarification that bike share members can get a $20 a month break).

It looked like the $500 tax credit for making energy-efficient home improvements was out, but it was put back in. Likewise, enhanced tax breaks for putting conservation easements on your land made it into the package.

“Many of these tax extenders are well-intentioned and ought to be permanent,” Wyden said, adding, “Let’s pass this bill today and then put a lens to each of these provisions before deciding which ones deserve a permanent spot in a 21st-century tax code. That task will be harder if these incentives disappear now.”

Wyden kept the proceedings on a roll by punting pet issues senators kept raising—repealing the Obamacare medical devices tax, making the adoption credit refundable, considering a disaster tax package (Sen. Charles Schumer (D-N.Y.) brought this up in light of lingering community woes due to Hurricane Sandy and Sen. Maria Cantwell (D.-Wash.) in light of the recent devastating mudslides in her state.

There was a big bout of laughter when Sen. Chuck Grassley (R-Iowa), the grandfather of the wind production credit, mistakenly voted “aye” for an amendment proposed by Sen. Toomey to strike the credit from the bill. The mistake was fixed, and the amendment failed 18 to 6.

What’s next? It’s expected that the Senate will pick up the extenders package in the near future, especially given the strong bipartisan support in the finance committee today. Once the Senate passes the extenders package, the House will be pressured to pass it. “The Republican House leadership is not going to want to have to explain to voters why it’s Democrats in the Senate and House that are hoofing it for tax cuts – and Republicans are sitting out,” says Zerbe.

One big issue left out of today’s discussion was the package’s spiraling cost. “There is a tremendous amount of time, energy and money going into protecting special tax breaks with very little attention to paying for the costs,” warns Maya MacGuineas, president of the Committee for a Responsible Federal Budget.